As a foreign private issuer and as permitted
by the listing requirements of Nasdaq, we rely on certain home country governance practices rather than the corporate governance
requirements of Nasdaq.
We are a foreign private issuer. As a result,
in accordance with Nasdaq Listing Rule 5615(a)(3), we comply with home country governance requirements and certain exemptions thereunder
rather than complying with certain of the corporate governance requirements of Nasdaq. Swiss law does not require that a majority
of our board of directors consist of independent directors. Our board of directors therefore may include fewer independent directors
than would be required if we were subject to Nasdaq Listing Rule 5605(b)(1). In addition, we are not subject to Nasdaq Listing
Rule 5605(b)(2), which requires that independent directors regularly have scheduled meetings at which only independent directors
Although Swiss law also requires that we
adopt a compensation committee, we follow home country requirements with respect to such committee and our compensation, nomination
and governance committee is tasked with certain director nomination and governance responsibilities as described under “Item
6. Directors, Senior Management and Employees.” As a result, our practice varies from the requirements of Nasdaq Listing
Rule 5605(d), which sets forth certain requirements as to the responsibilities, composition and independence of compensation committees,
and from the independent director oversight of director nominations requirements of Nasdaq Listing Rule 5605(e).
Furthermore, in accordance with Swiss law
and generally accepted business practices, our articles of association do not provide quorum requirements generally applicable
to general meetings of shareholders. Our practice thus varies from the requirement of Nasdaq Listing Rule 5620(c), which requires
an issuer to provide in its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the
outstanding voting stock. Our articles of association provide for an independent proxy holder elected by our shareholders, who
may represent our shareholders at a general meeting of shareholders, and we must provide shareholders with an agenda and other
relevant documents for the general meeting of shareholders. However, Swiss law does not have a regulatory regime for the solicitation
of proxies and company solicitation of proxies is prohibited for public companies in Switzerland, thus our practice varies from
the requirement of Nasdaq Listing Rule 5620(b), which sets forth certain requirements regarding the solicitation of proxies. In
addition, we have opted out of shareholder approval requirements for the issuance of securities in connection with certain events
such as the acquisition of stock or assets of another company, the establishment of or amendments to equity-based compensation
plans for employees, a change of control of us and certain private placements. To this extent, our practice varies from the requirements
of Nasdaq Listing Rule 5635, which generally requires an issuer to obtain shareholder approval for the issuance of securities in
connection with such events.
For an overview of our corporate governance
principles, see “Item 16G. Corporate governance”. As a result of the above, you may not have the same protections afforded
to shareholders of companies that are not foreign private issuers.
We may lose our foreign private issuer status,
which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant
legal, accounting and other expenses.
We are a foreign private issuer and therefore
we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable
to U.S. domestic issuers. We may no longer be a foreign private issuer as of June 30, 2019 (or the end of our second fiscal
quarter in any subsequent fiscal year), which would require us to comply with all of the periodic disclosure and current reporting
requirements of the Exchange Act applicable to U.S. domestic issuers as of January 1, 2020 (or the first day of the fiscal
year immediately succeeding the end of such second quarter). In order to maintain our current status as a foreign private issuer,
either (a) a majority of our common shares must be either directly or indirectly owned of record by non-residents of the United
States or (b)(i) a majority of our executive officers or directors may not be United States citizens or residents, (ii) more
than 50 percent of our assets cannot be located in the United States and (iii) our business must be administered principally
outside the United States. If we lost this status, we would be required to comply with the Exchange Act reporting and other requirements
applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We
may also be required to make changes in our corporate governance practices in accordance with various SEC and stock exchange rules.
The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements
applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a
result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would
make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations
applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules
and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.